Wells overtakes Ally in auto credit in Q1

Aggregate auto loans at U.S. banks and thrifts edged up in the first quarter while delinquencies fell below year-ago levels. Auto loan balances at commercial and savings banks, not including holding companies, increased by $6.21 billion over year-end 2013 and $33.38 billion over the first quarter of 2013, reaching $358.27 billion at March 31. Aggregate auto loans 30-plus days past due or in nonaccrual status dropped to 1.52% at March 31, down from 1.98% at year-end 2013 and 1.55% in the year-ago quarter.

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According to SNL data, the average interest rate charged on auto loans has been steadily falling over the last two years. The average rate on a five-year new car loan was 3.98% in mid-June, down 18 basis points year over year. Meanwhile, the average rate on a three-year used car loan was 4.19%, down 19 basis points over the same time frame.

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Wells Fargo & Co. overtook Ally Financial Inc. as the largest auto lender among depository institutions, reporting $52.61 billion in auto loans at March 31, compared to Ally's $51.92 billion. At least some of Wells Fargo's gains have come directly at the expense of Ally following the end of Ally's exclusivity agreement with General Motors.

Gainers grabbed for more than new car loans

Wells Fargo added $1.80 billion to its auto loan tally quarter over quarter and $5.35 billion year over year, while Ally's auto loans were up only $208.0 million quarter over quarter and down $8.49 billion year over year.

During Wells Fargo's investor day in May, Thomas Wolfe, executive vice-president of consumer credit solutions, noted that auto originations jumped 16% quarter over quarter. Wolfe also remarked that 95% of the company's auto loans come from car dealers and that for every new car subvented business Wells Fargo does with the new GM dealer relationships, the bank books three used-car loans at the same dealership.

Santander Holdings USA Inc. entered the ranks with the sixth-highest level of auto loans —$21.07 billion at March 31—after the company began reporting the auto loans held at its consolidated subsidiary, Santander Consumer USA Holdings Inc.

Santander Holdings USA was another beneficiary of an auto company's expired contract with Ally Financial, this time Chrysler Group LLC and FIAT. In February 2013, Chrysler announced a 10-year agreement with Santander Consumer USA Inc. whereby Santander would provide auto loans to Chrysler and FIAT customers and dealers under the name Chrysler Capital.

According to a May 21 investor presentation by Santander Consumer USA Holdings, the company originated $6.95 billion in consumer loans and leases in the first quarter, of which $3.5 billion were Chrysler retail loans and more than $1.2 billion were Chrysler leases. Overall loan originations were $2.77 billion in the same quarter of 2013.

Santander Holdings USA's auto loans 30-plus days past due or in nonaccrual status were equal to 8.33% of total auto loans at March 31, the highest percentage among the top 25 depository institution auto lenders in SNL's ranking.

Capital One Financial Corp. posted the second-highest delinquency rate at 5.63% at March 31, but that was down from 7.46% at year-end 2013 and 5.93% in the year-ago quarter.

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